Mountain Province Takes Loans to Keep Business Afloat 

Mountain Province has borrowed money to secure its share of the Gahcho Kué mine in Canada as it weathers “serious financial difficulty” that puts its business at risk. 

The $40 million in funding, which the company obtained from majority investor Dunebridge Worldwide, will allow it to continue to meet its immediate and near-term obligations until the middle of the second quarter, it said Tuesday. Of that $40 million, $30 million will be available to Mountain Province immediately, while the miner will be able to access the remaining $10 million at Dunebridge’s discretion. 

“The company expects 2025 to be a particularly challenging year for the production and sale of rough diamonds from the Gahcho Kué diamond mine,” Mountain Province commented. “The refinancing transactions are designed to support the company in meeting those challenges.” 

The miner, which owns a 49% share in the site, will also amend its joint-venture agreement with partner De Beers, which holds the remaining 51% stake. Under the new terms, should Mountain Province fail to repay funds when they are due, De Beers can collect the proceeds from the sale of all diamonds until Mountain Province repays the amount in default.  

The current funding is not enough to support Mountain Province throughout the year, it noted. The miner will require additional capital of approximately CAD 33 million ($23 million) to finish 2025. The refinancing option comes after months of negotiations with De Beers and the company’s creditors, Mountain Province explained.  

The financial difficulties are the result of several factors, including the persistent pricing pressures on rough diamonds over the past three years, as well as a delay in accessing the NEX orebody at Gahcho Kué. Mining at that portion of the deposit would have resulted in increased production, which could have offset the lower prices, Mountain Province noted. Entry to the NEX orebody has been delayed until the third quarter of the year for technical reasons. 

Additionally, the company’s postponement of its February sales cycle to March to optimize sales prices, and a smaller-than-usual return from the January sale, meant Mountain Province did not have sufficient cash to pay De Beers the money it owed the joint venture this month, for which it is currently in arrears, it explained. The Canadian miner will reduce the number of sales it holds this year from nine to seven in response to the weak market conditions and production levels at Gahcho Kué, it added. 

This is not the first time the miner has run into financial trouble in recent years. In June 2020, it sold $50 million in rough to Dunebridge after Covid-19  tanked diamond prices and demand, and the investor again bailed out Mountain Province at the end of 2021, that time with a $50 million loan. 

Image: The Gahcho Kué mine. (Mountain Province)